'Closing the last mile to the customer's doorstep': Ingram buys Aer.io

Image – iStockphoto: MasterLu

‘I’m committed for years to come’

If a startup acquisition in the publishing space has ever looked like a match made in digital heaven, the Ingram Content Group-Aer.io deal announced today is it. (Our news story on the acquisition by my colleague Philip Jones is here.)

“Effectively, the team is staying together,” says founding c.e.o. Ron Martinez. No carpet strewn with the bodies of redundancies. “I’m working with a group on market development for the product” with Ingram’s staff. “I’m committed for years to come. As long as they’ll have me.”

Hindsight being the well-focused squint that it is, we now can look back at the FutureBook manifesto that Martinez contributed to our series and see better what was on his mind. In A manifesto to reinvent the book marketplace, Martinez wrote: “The story of tech innovation is the story of democratisation.” And what Aer.io (formerly called Aerbook) aims to do is just that—in Martinez’s words, the goal is to “make the power of the publishing supply chain, for both print and ebooks, available to anyone at the push of a button.”

A perusal of the San Francisco company’s sweetly-retro logo and site shows you how that concept plays out:

For standard Web operations: “Embed a storefront on your site. Share and sell in social streams. Add Buy buttons to existing pages.”

For social media in-stream sales: “Share products on Pinterest, Facebook, Twitter, LinkedIn, and more. The cart and checkout is baked in.”

So sharp was this vision from the start that only halfway through the company’s five years, John Ingram was watching—and investing. As it turns out, Aer.io (pronounced “Aereo”) is being bought by one of its major backers.

“John Ingram was the first person I talked to from the company,” Martinez says. “He was handling a lot of the venture investment they were doing in innovation. And I had this incredible opportunity to talk with him about the launch of Lightning Source,” Ingram’s print-on-demand (POD) offering for medium-sized and large publishers. “And we’ve had this support from John and the management team really for years now. It’s felt as if we were part of an extended team for quite some time.”

“We have a number of integrations with Ingram services now, as well,” Martinez says, his natural proclivity for droll self-deprecation chiming in: “So Aer.io now has warehouses and print-on-demand facilities around the world. Which is kind of odd to say.”

‘Closing the last mile to the customer’s doorstep’

“I’m sort of grappling, myself, for what [the acquisition] means for an industry that I’ve been privileged to connect to,” and which of course has so many players and gradations of commercialisation needs—from the lone author with a Web site to the bookstore on the corner and the publisher in Manhattan or London or Berlin.

“Really what it means,” he says, “is that for the first time, we’re putting a self-service front-end on the Ingram infrastructure. That’s never happened before. Such powerful and deep enterprise services for publishers that have thousands of books. We work with some Big Five publishers now and Ingram works with a whole bunch. But Ingram has powered so much of the supply chain and is so integral to having created the modern bookselling marketplace, both online and off.

“Now Ingram is offering retail as a service. In the same way that distribution is a service, and print-on-demand is a service, and digital fulfillment is a service, now there’s retail as a service. That’s closing that last mile to the customer’s doorstep. Or to the device in their pocket.

“And when that’s made available to everyone, particularly in a contemporary way that makes any point-of-presence a point-of-sale—right? Well, then, it’s distributed, native, mobile, not your garden-variety cart-and-checkout. When that becomes available to anyone, either at the enterprise level or at the self-service level—or at the self-publisher level: an author can simply push their book up into the Aer.io network, and also make it available to anyone else in the network to sell—it’s really a network model and it has been designed and architected to support this rich and diverse ecosystem.

“It can also support brick-and-mortar sellers we’ve had discussions with. Influentials, media companies…not to be so diffuse that we boil the ocean—because we have no intention of doing that and neither does Ingram. But the self-service aspects of it have brought really remarkable people to the table,” a far wider range of players, he says, than a simple business development proposal would have produced.

“Let’s say I’m an influencer with 10 million viewers a day. A celebrity. I would like to sell these books on my site. I’d like to sell my books and other books. I’d like to have a book club. Or I have millions of people presenting my magazine online. If I’m already, in a clunky way, selling books and things, with this [Aer.io], I can create a certain network of special sales in a way that’s vertically oriented.”

The distributor has become distributed

This is verticalisation in a very pure concept. The organising appeal might be that celebrity figure Martinez describes, or a hobby followed by lots of people, or a range of topics with a standing following. The niche audience gathering around that organising appeal supports the products of the vertical, which is created when the main player(s) use that “self-service front-end” to begin leveraging the distributional powers of Ingram’s apparatus.

“We’ve spent most of our time architecting in software a next-generation version of the bookselling marketplace, one that’s intended to distribute the power of Ingram to any participants, whether you’re a seller or buyer or retailer or publisher.

“It’s like the old supply chain made it very difficult. If you wanted to sell print books direct using Ingram fulfillment, it was a complicated proposition. You can set that up in minutes now with this self-service approach. It really speaks to Ingram’s commitment to evolving the marketplace by innovating in really meaningful ways.”

It’s worth noting, Martinez agrees, that when an industry-spanning force the size of Ingram allows users to get their own hands on its services and direct them as needed—call those users clients, vendors, or that celebrity with a lot of books to sell—then a sea change is under way, the promise of digital, an engine of distribution, is being fulfilled: tools and levers are being placed within reach of the makers.

‘You can’t just go ahead and blow out the corner bookstore’

One of the potential developments to follow, Martinez says, lies in the brick-and-mortar bookseller arena. He and Aer.io have worked extensively with member-companies of the American Booksellers Association (ABA), looking at that peculiar gap between a corner shop’s shelves and online retailing.

“The way we’re set up, there’s the bookstore on the corner. And maybe a third of independent booksellers in the US have an online presence, per the ABA, which is surprising. It’s complex and expensive. But with Aer.io, there’s so much price and margin control. The economics are so beneficial. You can discount up to 25 or 30 percent. So if you’re selling at list price, you’re doing 25 or 30 percent, and that’s net margin, not gross margin. Because we’re handling everything.

“There’s no reason why my favorite bookstore on Fillmore” Street in San Francisco “can’t have access to 14 million titles that can be sold at reasonable margins. Then they bring their curation and marketplace presence and community and connection and passion to sell the books. Good for publishers and authors.”

If booksellers take the cue here and explore what this kind of access to online agility offers, one of Martinez’s principles will have been realized: inclusiveness, the democratisation effect he was writing about in his manifesto.

“You can’t just go ahead and blow out the corner bookstore,” he says. “You have to start by asking how to do things in a way that works for people who know how to sell books? Bookstores are selling books. And you fail if you cut out any part of the ecosystem.”

‘Near Business-Death Experiences’

You hear that wonderful laugh as soon as you ask Martinez if the progress of Aerbook/Aer.io has been as orderly and smooth as it has appeared over the company’s five-year lifespan.

“I have a book I’ve been meaning to write,” he says, “called Near Business-Death Experiences. It’s for those who have experienced clinical business-death experiences and received wisdom that they brought back to the rest of us, you know? I mean, there were a couple of times…” he breaks off into laughter again.

“It’s the dedication of the team” that gets you past the open windows, he says, especially when you pivot.

“We started with an exploration of the evolution of the form. The digital wave sweeps over everything from means of production to the product itself, right? So we started at the product itself, thinking about enhanced linear storytelling. And that got us into the problems of distribution and retail and formats and proprietary mechanisms. And those transitions ended up bringing us to this large-scale networked retail model. A couple of times, it got a little touch-and-go. We had to tighten our belts and stay at it.

“But it’s been great to have the support of Ingram along the way. They’ve invested in the company, they’ve believed in the team, and they’ve nurtured us. We never were quite at the point where we wanted to throw in the towel. We’re just not built that way, anyway.”